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TMI Blog1985 (3) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... plywood in panel stage, not trimmed and not sanded, is not known in the market as plywood. Plywood when it comes out of the press at the panel stage, therefore, clearly falls within Item 16B of the First Schedule, and the authorities concerned were, therefore, justified in seeking to levy duty on plywood at the panel stage. We are, therefore, of the opinion that the High Court was in error in allowing the writ petition and in quashing the said two Notices. We must, therefore, allow the appeal and set aside the judgment of the High Court holding that the two notices issued which were quashed by the High Court, are valid and lawful. - 21 of 1971 - - - Dated:- 26-3-1985 - D.A. Desai and Amarendra Nath Sen, JJ. [Judgment per : Amarendra Nath Sen, J.]. - The question for consideration in this appeal by Special Leave is whether the plywood manufactured by the Respondent and utilised by the respondent in manufacturing plywood circles to be used as component parts of packing material for wires and cables is exigible to excise duty under the Central Excises and Salt Act, 1944. 2. The respondent is a manufacturer of plywood circles to be used as component parts of packing materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Collector referred to in the notice of the Range Officer. It further appears that the Advocate, of the firm had also addressed a letter on 24-2-1967 to the Collector, requesting the Collector for a copy of the order. No copy of the order was furnished to the firm or the Advocate and instead the Range Officer on 24-2-1967 issued a further notice to the firm reiterating the stand earlier taken in the notice dated 22-2-1967 and this notice dated 24-2-1967 further directed that duty paid on plywood panels cleared outside the factory could not be brought back for further process of cutting circles without obtaining prior permission. 5. On 28-2-1967 the firm filed a writ petition in the High Court in which the validity of the aforesaid notice was challenged and obtained an order of stay of the operation of the aforesaid notices. The writ petition came up for final hearing on 27-2-1969. A learned Single Judge of the High Court passed an order to the effect that the Collector of Customs would issue a copy of the order referred to in the notice of the Range Officer dated 22-3-1967 within a month from that date and on receipt of that order the firm might seek appropriate remedies by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press into smaller panels or shooks is equally not part of the process of manufacture of plywood but is a part of making tea-chests. Sub-item (ii) includes `all others', which evidently means that all the rest excluding the cut panels or shooks suitable for making tea-chests mentioned in sub-item (i) : this means that all the rest of the plywood out into any other shape or not cut." 9. The Division Bench further held :- "Again, the blocks or panels from which the appellant cuts out circles are all unfinished products, because they will become finished products only when they are trimmed and their edges are sanded. Therefore, the argument that the manufacture of plywood is over the moment the product comes out of the press cannot be correct." 10. The Division Bench negatived the other contention raised on behalf of the authorities that plywood for the purpose of assessment is only that plywood which has a general market with the following observations :- "The second contention that plywood is only plywood which has a general market cannot also stand serious scrutiny. The panels or shooks cut to size for making tea-chests do not have a general market in that sense, so that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the First Schedule. * * * * * * * * * * * * (2) The Central Government may, by notification in the Official Gazette, fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force. (3) Different Tariff values may be fixed :- (a) for different classes or descriptions of the same excisable goods; or (b) for excisable goods of the same class or description; (i) produced or manufactured by different classes of producers or manufacturers; or (ii) sold to different class of buyers : Provided that in fixing different tariff values in respect of excisable goods falling under sub-clause (i) or sub-clause (ii), regard shall be had to the sale prices charged by the different classes of producers or manufacturers or, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out, throw proper light on the question. On a careful consideration of the provisions contained in Item 16B, we find it difficult to agree with the view expressed by the High Court. The main provision in Item 16B indicates that plywood is `liable to excise duty whether in Sheets, Blocks, Boards or the like. Sub-item (1) provides that plywood for tea-chests when cut to size in panels or shooks and packed in sets will be charged duty at the rate of 10% ad valorem and sub-item (2) provides that in all other cases duty will be charged, at the rate of 15% ad valorem. A proper reading of this item indicates that plywood, except in case of tea-chests, is liable to be charged at the rate of 15% ad valorem whether in sheets, blocks, boards or the like. In other words, this item makes it clear that the excise duty is payable on plywood whether in sheets, blocks, boards or the like at the rate of 15% ad valorem, except in case of plywood for tea-chests; and, in case of plywood for tea-chests when cut to size in panels or shooks and packed in sets, duty payable is 10% ad valorem. It is only in case of tea-chests, plywood, when cut to size in panels or shooks and packed in sets, is to be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss as alloy of copper and zinc. These alloys are prepared by melting metals and mixing them together. These alloys are then converted into billets. These billets were of two kinds viz. of Kansi and Brass. These billets are then sent by the respondent joint family business to their agents who had a rolling mill and the rolling mills rolled the billets into uncut circles. Subsequently, these uncut circles are trimmed and after further work on them, they are converted into utensils and sold as such in the market by the respondents. The Excise Authorities imposed Excise Duty at the stage when the rolling mills prepared circles from the billets under Item 26A of the First Schedule read with Section 3 of the Act. Item 26A of the First Schedule as noted in the judgment reads as follows :- "Description of goods Rate of duty Copper and copper alloys containing not less than fifty per cent by weight of copper, — (1) In any crude form including ingots, bars, blocks, slabs, billets, shots and pellets. Three hundred rupees per metric tonne. (2) Manufactures, the following, namely, plates, sheets, circles, strips an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inished product for purposes of Item 26A cannot be accepted because that item itself envisages excise duty being levied on `circles in any form or size'. We cannot understand how it can possibly be contended that uncut circles are not circles in any form or size. There is nothing in the item from which an inference can be drawn that the intention of the Legislature was to tax trimmed circles and not uncut circles. If there had been any such intention, the Legislature would not have used the expression `circles in any form'. Uncut circles are certainly one form of circles." 20. It may be noted that in this decision the Court considered the case of Union of India v. Delhi Cloth and General Mills - 1977 (1) E.L.T. (J177) = (1963) Supp. 1 SCR 586 on which reliance was placed by the counsel for the respondent and also the case of South Bihar Sugar Mills Ltd. v. Union of India - 1978 (2) E.L.T. (J 336) = (1968) 3 SCR 21, this Court observed :- "In our opinion, neither of these cases supports the contention raised on behalf of the respondents, and it appears that the ratio of these decisions has been misunderstood by the High Court and the lower courts. In the case of Union of India v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gas, which was subjected to excise duty, was held by the Court not to be carbon dioxide, while only carbon dioxide was liable to duty. It was held that the products that came into existence was a mixture of gases containing only a percentage of carbon dioxide and could not, therefore, be held to be carbon dioxide alone which could be subjected to excise duty under Item 14H of the First Schedule." 21. Item 16B makes it clear that plywood in sheets, blocks, boards or the like attracts excise duty. A special provision by way of exception is made only in the case of plywood for tea-chests when cut to size in panels or shooks and packed in sets. The provision in Item 16B that plywood in sheets, blocks and board or the like, which attracts duty is indeed in very broad terms and the expression `like' does necessarily include circles. There is nothing to indicate in this item that plywood must be trimmed or sanded. Plywood is manufactured as soon as it comes out of the press, though the same may not be trimmed or sanded out of which circles are to be produced. There is nothing to indicate that plywood in panel stage, not trimmed and not sanded, is not known in the market as plywood. P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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